FINANCIAL CHECK-UP VANESSA F. BRIGHT, EXTENSION EDUCATOR (FIELD FACULTY), UNIVERSITY OF MARYLAND EXTENSION The University of Maryland, College of Agriculture.

FINANCIAL CHECK-UP

VANESSA F. BRIGHT, EXTENSION EDUCATOR (FIELD FACULTY), UNIVERSITY OF

MARYLAND EXTENSION

The University of Maryland, College of Agriculture and Natural Resources programs are open to all and will not discriminate against anyone because of race, age, sex, color, sexual orientation, physical or mental disability, religion, ancestry, or national origin, marital status, genetic information, or political affiliation, or gender identity and expression.

University of Maryland Extension

• The University of Maryland Extension offers solutions in your community by bringing

research-based programs to you for practical, everyday use. The Money Smart Impact

Team is your source for unbiased, financial education.

http://extension.umd.edu/finance

Financial Check-up – Your Financial Future Today

• Set financial goals

• Financial statement

• Budget and money management

• Build credit and manage debt

• Protect wealth with insurance

• Save and invest

Make your goals smart

Cash Flow Statement (Net Gain or Loss)

Income ExpensesNet Gain

or Loss

Character: SarahJob: Mobile Phone SalesMonthly Take-home Pay: $3850

• Sarah has a well-paying job in mobile phone sales. However, she doesn’t like her job very

much. Nevertheless, her job pays her bills. Sarah has always loved photography. In her

spare time, she takes photographs of nature and people enjoying life. She wishes that she

could find a job that would pay her to do what she loves. She graduated from college with a

Bachelors in Marketing. Sarah recently got a job offer for a position photographing special

events, but the pay is not enough to cover her current bills. Her take home pay at the potential

job will be $3000. Her current gross income is $6311 and she takes home $3850 after taxes.

•  Sarah’s Goal: To find a way to accept her dream job at the lower take-home rate and still

meet her expenses.

Track your spending

Date Item Cost Need or Want?

Step One: Identify Your Income

Income Sources Monthly Amount $

Wages

Interest and Dividends

Bonuses

Rental Income

Other

Total Income

Step Two: List Your Expenses

Expenses Monthly Amount $

Savings and Investments

Housing

Utilities

Phone

Insurance

Groceries

Transportation

Other

Total Expenses

Step three: Compare Your Income and Expenses

Income and Expenses Per Month $

Total Monthly Income

Total Monthly Expenses

Subtract Expenses from Income

WHAT IS A CREDIT SCORE? WHY IS IT SIGNIFICANT?

Mortgage Amount

Credit Score Best Interest Rate

Monthly Payment

$200,000 Marissa’s Score 740

3.99% $953.68

$200,000 Connie’s Score 640

4.75% $1043.29

PROTECT YOUR FINANCIAL FUTURE

• Insurance helps to protect you from a major financial loss.

• Insurance is simply a promise of reimbursement for a loss in return for a

paid premium.

• You should shop around for insurance products.

• Insurance is available for all types of risks (e.g., health, disability, auto,

home, life)

Insurance Needs Throughout life

Scenario Type of Insurance When Does it Begin?I hit a car while backing out of my driveway.

Auto When car is purchased

I fell off a ladder while painting my house and broke my leg.

My neighbor injured his back while walking up my steps with a broken rail.

The Power of Compound Interest

Year Balance Start Interest Balance at End

Now $1000 $1000 x 10% = $100 $1100

1 $1100 $1100 x 10% = $110 $1210

2 $1210 $1210 x 10% = $121 $1331

3 $1331 $1331 x 10% = $131.10 $1464.10

4 $1464.10 $1464.10 x 10% = $146.41

$1610.51

5 $1610.51

Rule of 72Years 3% 6% 12%

0 10,000 10,000 10,000

6 20,000

12 20,000 40,000

18 80,000

24 20,000 40,000 160,000

30 320,000

36 80,000 640,000

42 1,280,000

48 40,000 160,000 2,560,000

What Happens When You Start Saving Early?

JoAnn’s IRA (starts at age 22) Susan’s IRA (starts at age 31

Average annual rate of return 9% 9%

Number of years of contributions

9 34

Amount contributed $1000 per year($9000 total)

$1000 per year($34,000 total)

Future value $243,863 at age 65 $196,982 at age 65